What Is the NACA Mortgage Program? Requirements, Reviews and Process

NACA (Neighborhood Assistance Corporation of America) is a nonprofit that offers mortgages with no down payment, no closing costs, no PMI and below-market interest rates. The program serves low-to-moderate income buyers who earn up to 100% of their area’s median income, or up to 150% in high-cost areas. NACA has helped over 75,000 families buy homes since 1988, making it one of the largest homebuyer assistance programs in the country.

Is NACA Legit?

Yes, NACA is a legitimate nonprofit organization that has operated since 1988. The program partners with Bank of America to fund its mortgages and has facilitated over $20 billion in home loans. NACA maintains an A+ rating with the Better Business Bureau and has been featured in major publications including The New York Times, CNN and NPR.

What makes some people skeptical:

• The terms seem too good: No down payment, no closing costs and below-market rates sounds like a scam. But NACA operates as a nonprofit, and Bank of America provides the funding as part of its Community Reinvestment Act obligations.

• The process takes longer: NACA mortgages typically take 4-6 months from first workshop to closing. This extended timeline frustrates some buyers but reflects the program’s thorough counseling process.

• Strict property requirements: NACA requires the home to pass inspection and be your primary residence. Investment properties don’t qualify.

Marcus and Elena Ruiz closed on their Phoenix home through NACA in 2023. They saved $14,500 in down payment and closing costs compared to an FHA loan. Their interest rate came in at 5.875% when market rates sat at 6.75%.

NACA Income Requirements

NACA targets low-to-moderate income buyers. Income limits depend on your area’s median income and your household size.

General Income Guidelines

Category	Income Limit
Low Income	Up to 80% of Area Median Income
Moderate Income	80-100% of Area Median Income
High-Cost Areas	Up to 150% of Area Median Income

Income Limits by Metro Area (2024 Examples)

Metro Area	1-Person Limit	4-Person Limit
Atlanta, GA	$67,400	$96,250
Houston, TX	$62,150	$88,750
Phoenix, AZ	$63,700	$90,950
Chicago, IL	$72,450	$103,500
Los Angeles, CA	$97,600	$139,400
New York, NY	$96,050	$137,200

High-cost areas like LA and NYC have higher limits to account for expensive housing markets. Check NACA’s website for your specific area limits.

What Counts as Income?

NACA counts all household income from anyone who will live in the home:

• W-2 wages and salary
• Self-employment income (2-year average)
• Social Security and disability payments
• Pension and retirement income
• Child support and alimony (if it will continue 3+ years)
• Rental income from other properties

David Chen earns $58,000 as a warehouse supervisor in Atlanta. His wife Teresa works part-time earning $18,000. Their combined $76,000 income falls under the moderate-income threshold for their area. They qualified for a NACA mortgage on a $285,000 home.

NACA Mortgage Program Requirements

Beyond income limits, NACA has specific requirements that differ from traditional mortgages.

Financial Requirements

No minimum credit score: NACA doesn’t use credit scores for approval. Instead, counselors review your payment history on rent, utilities and other bills. You need to show 12 months of on-time payments.

Minimum payment shock ratio: Your new mortgage payment can’t exceed your current rent by more than a certain percentage, unless you can demonstrate savings patterns that show you can handle the increase.

Savings requirements: While no down payment is needed, you must show you can save. NACA wants to see consistent savings deposits for several months before approval.

Debt payment history: All debts must be current. Collections and charge-offs need to be addressed during the counseling process.

Property Requirements

• Must be your primary residence (owner-occupied)
• Single-family home, condo, townhouse or 2-4 unit property where you live in one unit
• Must pass NACA inspection and appraisal
• Located in NACA’s lending areas (most major metros covered)
• No investment properties or second homes

Participation Requirements

• Attend a homebuyer workshop (online or in-person)
• Complete counseling sessions with a NACA housing counselor
• Participate in NACA advocacy activities (optional but encouraged)
• Agree to occupy the home as your primary residence

How the NACA Application Process Works

The NACA process takes longer than traditional mortgages—typically 4-6 months from first workshop to closing. Here’s what to expect.

Step 1: Attend a Homebuyer Workshop (Week 1)

The workshop runs about 3-4 hours and covers:

• How the NACA program works
• Financial preparation for homeownership
• The qualification process
• Your responsibilities as a NACA member

Workshops happen online and at NACA offices in major cities. Attendance is mandatory before you can proceed.

Step 2: Create Your Online Account (Week 1)

After the workshop, you’ll create an account on NACA’s web-based system. This is where you’ll upload documents, schedule appointments and track your progress.

Step 3: Submit Your Documents (Weeks 2-4)

Required documentation includes:

• Last 2 years of tax returns
• Last 2 months of pay stubs
• Last 3 months of bank statements
• 12 months of rent payment history
• Photo ID and Social Security card
• Proof of any other income sources

NACA counselors review everything thoroughly. Missing documents delay the process significantly.

Step 4: Counseling Sessions (Weeks 4-12)

You’ll meet with a NACA counselor (in-person or by phone) to:

• Review your budget and spending
• Address any credit issues
• Determine your purchase price range
• Create an action plan for any problems

Angela Washington had a $2,400 collection account from an old medical bill. Her NACA counselor helped her negotiate a settlement for $960 and set up a payment plan. Once resolved, she moved forward in the process.

Step 5: Achieve NACA Qualification (Weeks 8-16)

Once you’ve addressed all issues and demonstrated payment readiness, NACA issues your qualification letter. This works like a pre-approval and specifies your maximum purchase price.

Step 6: House Hunting and Purchase Action (Weeks 12-20)

With qualification in hand, you can start searching for homes. When you find one:

• Make an offer with your NACA qualification letter
• Schedule a NACA inspection
• Complete the Purchase Action meeting
• Move toward closing

Step 7: Closing (Week 20-24)

NACA closing works like any other mortgage closing, except you won’t bring a check for down payment or closing costs. Your only out-of-pocket expense might be prepaid items like homeowners insurance.

NACA Mortgage Benefits Explained

Below-Market Interest Rates

NACA typically offers rates 0.25% to 0.50% below current market rates. In a 7% market, you might secure 6.5% to 6.75%.

Rate buydown options let you go even lower. For every $1,500 you pay at closing, you can reduce your rate by 0.25%. Some buyers use gift funds to buy down their rate significantly.

The Rodriguez family received a $6,000 gift from relatives. They used it to buy down their rate by 1%, dropping from 6.25% to 5.25% on their $220,000 loan. This saves them $142 per month—over $51,000 across the 30-year term.

No Down Payment

Zero down means you keep your savings for:

• Moving expenses
• Furniture and appliances
• Emergency fund
• Minor repairs after move-in

On a $300,000 home, an FHA loan requires $10,500 down. NACA requires $0.

No Closing Costs

Typical closing costs run 2-5% of the purchase price. On a $300,000 home, that’s $6,000-$15,000. NACA borrowers pay $0 in closing costs.

No PMI Ever

Private mortgage insurance on an FHA loan adds 0.55% annually to your loan. On a $300,000 loan, that’s $137/month. NACA mortgages never require PMI regardless of your down payment (or lack thereof).

No Prepayment Penalty

You can pay extra toward principal anytime without fees. This lets you build equity faster and potentially pay off your mortgage early.

Is NACA a Scam? Common Concerns Addressed

”The process takes too long”

True. NACA takes 4-6 months compared to 30-45 days for conventional loans. The extended timeline reflects genuine counseling and education, not inefficiency. If you need to close quickly, NACA isn’t the right choice.

”You have to participate in protests”

Mostly false. NACA encourages participation in advocacy activities but doesn’t require it. The organization has historically organized protests against predatory lenders, which is part of its mission.

”The program disappeared after the housing crisis”

False. NACA has operated continuously since 1988, through the 2008 crisis and beyond. The program actually expanded during the crisis to help more families.

”Banks don’t accept NACA offers”

False. Sellers receive cash at closing just like any other mortgage. Some sellers prefer conventional loans because they close faster, but NACA offers are otherwise equivalent.

NACA Housing Program Reviews

Reviews on sites like Yelp, Google and the BBB are mixed—mostly reflecting the lengthy process rather than problems with the program itself.

Common Positive Feedback

• “Saved us $18,000 in down payment and closing costs”
• “Interest rate was 0.5% lower than we could get anywhere else”
• “Counselor helped us fix credit issues we didn’t know how to address”
• “Monthly payment is $200 less than we expected”

Common Complaints

• “Took 7 months from start to finish”
• “Had to submit documents multiple times”
• “Counselor was hard to reach”
• “Process felt disorganized at times”

Patricia Okonkwo spent 5 months in the NACA process for her Baltimore townhouse. “Frustrating at times, but worth it. I saved $12,000 and got a rate half a percent lower than my sister who went conventional. I’d do it again.”

Better Business Bureau Rating

NACA holds an A+ BBB rating with the organization accredited since 2012. Complaint volume is relatively low for the number of mortgages processed.

NACA vs FHA Loans: Which Is Better?

Feature	NACA	FHA
Down Payment	0%	3.5% minimum
Closing Costs	$0	2-5% of loan
PMI/MIP	None	0.55% annually for life
Credit Score	No minimum	580 for 3.5% down
Interest Rate	Below market	Market rate
Processing Time	4-6 months	30-45 days
Income Limits	Yes	No

Choose NACA if:

• You have limited savings for down payment
• You can wait 4-6 months to close
• You earn under your area’s income limit
• You want the lowest possible monthly payment

Choose FHA if:

• You need to close quickly
• Your income exceeds NACA limits
• You prefer a simpler process

Frequently Asked Questions

What does NACA stand for?

NACA stands for Neighborhood Assistance Corporation of America. It’s a nonprofit housing advocacy organization founded in 1988 by Bruce Marks. The organization operates the NACA mortgage program and advocates for affordable housing policies.

What are the NACA program requirements?

NACA requires income below area median limits, 12 months of on-time payment history on current obligations, completion of a homebuyer workshop and counseling sessions, and purchase of a primary residence. There’s no minimum credit score and no down payment requirement.

How long does the NACA process take?

The typical NACA timeline runs 4-6 months from first workshop to closing. Complex situations involving credit repair or documentation issues can extend this to 8-12 months. The process moves faster if you submit complete documents promptly.

Is NACA only for first-time buyers?

No. NACA serves first-time and repeat buyers. However, you cannot currently own another property. If you own a home now, you must sell it before closing on a NACA mortgage.

Can I use NACA for a rental property?

No. NACA mortgages require owner occupancy. The property must be your primary residence. You can buy a 2-4 unit property and rent out the other units, but you must live in one unit yourself.

What interest rates does NACA offer?

NACA rates typically run 0.25% to 0.50% below current market rates. You can buy down the rate further by paying $1,500 per 0.25% reduction at closing. Rates change with market conditions—check NACA’s website for current rates.

Does NACA have rental assistance?

NACA’s primary program focuses on homeownership, not rental assistance. However, NACA does offer some foreclosure prevention and mortgage modification assistance for existing homeowners facing hardship. Contact your local NACA office for available programs.